Let me start today with some numbers so I can immediately put you to sleep.
In fiscal year 2009, Washington said the country had a deficit of $1.4 trillion. In fiscal year 2010, which ended last September, Washington was pleased to announce that the deficit was only $1.3 trillion.
I don’t know about you but I do not find either of those numbers comforting, especially when the total debt being carried by the US is now a stunning $13.5 trillion. Remember the good ol’ days — like in the early 2000s — when annual deficits that skyrocketed to, say, $200 billion or $250 billion were found to be appalling?
Trillions! We are now talking trillions!
Remember when we could go to war just for the fun of it and not have to worry about how we were going to pay for the bombs? (That’s sarcasm, folks, don’t send me nasty letters.)
Today’s deficit numbers are absolutely, totally, completely insane. And they are also inaccurate.
That’s my theme for today.
Even as Congress this week nips and tucks gently at the nation’s spending to come up with a billion here and a billion there in cuts so the government won’t be shut down, the deficit is far more out of control than you are being told.
Here are the exact deficit numbers, which you can get from: http://www.treasurydirect.gov/NP/BPDLogin?application=np
And so you don’t get the wrong impression, this is a Web site put together by the US Treasury and not conservative fiscal reformers who think the economy should be flogged with cutbacks.
Washington is telling you that the deficit was just $1.3 trillion for the year ended September. Well, grab this table, plug in the starting date of Sept. 30, 2009, and the ending date of Oct. 1, 2010, and here’s what you get.
The nation’s total debt at the end of Sept. 2009 was (rounded off) $11.910 trillion. By the beginning of Oct. 2010, total debt had risen to $13.611 trillion. (It’s larger now because we are halfway into the 2011 fiscal year.)
Now I’m going to take out my $1 solar powered calculator to do the math. Feel free to do it with me: $13.610 trillion debt in fiscal 2010, minus $11.909 trillion debt in fiscal 2009 = $1.702 trillion deficit for 2010.
So we didn’t have a $1.3 trillion deficit like the politicians want us to believe. It was really $1.702 trillion, which is worse than the official number by $402 billion. Jeez!
Why the discrepancy? Because our elected officials don’t count the money they took from the Social Security Trust Fund, which will eventually have to be paid back, just like the dough we borrowed from the Chinese or money your Aunt Myrtle gave to Washington when she bought a US Savings Bond.
Should Washington be considering massive budget cuts? Probably not, because the economy is still very fragile and could very easily head back into a recession.
But on the other hand, we can’t keep spending like this. This is what you call a dilemma. And I’m glad I only have to write about the problem, and don’t have to fix it. Washington is now putting on a show: shut the federal government, or raise the debt limit and keep it going?
It’s bad theater. I never liked farces.
The government can’t shut down — not if people who rely on benefits from Washington want to keep eating and going to the doctor, and if we want to continue fighting three simultaneous wars.
How’d we get into this mess? Well, it’s simple: people fell asleep when Washington started talking about the numbers.
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Bill Dudley, the head of the New York Federal Reserve Bank, is an honest man — finally.
Back in early January, Dudley graciously released his phone and meeting schedule up until September 2010. And, whatcha know, the former Goldman Sachs executive wasn’t observing the blackout period that the Fed imposes in the week leading up to its policy making meetings.
In fact, Dudley had been having quite a few meetings with Wall Street people who could have easily benefited from any stray word about the Fed.
As I was expecting, Dudley late last week released his new schedule for the September through December 2010, and I only found one meeting with someone from Wall Street. That someone was billionaire inves tor John Paulson. And the meeting was during the prohibited period be fore the Fed meets.
Now I’d like to take credit for scaring Dud ley straight, but I can’t. My column question ing his meetings ran in early January and the schedule that was just released showed meetings only through December.
So it couldn’t have been me. I’m guessing that someone inside the NY Fed must have said: “Hey, Dud, what you doin’ meeting with these jokers?” And he stopped.
Well, good for him. If Dudley keeps this up, pretty soon Diogenes will come looking for him.